This compelling paper argues how the AI-automation arms race that organizations are having would lead to a depletion of spending power of the population and eventually collapse of the economy.
Most people who are running these organizations know this eventual reality, but they remain trapped in an automation arms race to secure immediate cost savings for as long as possible, otherwise they would lose to their competition. That prevents them from exercising voluntary restraint.
They propose a Pigouvian automation tax set equal to the uninternalized demand loss per task.
Here, the 'uninternalized' means the loss in consumer demand due to income loss of workers impacted by the collective industry decision of moving towards automation. The burden is shared by all the organizations involved in automating that task category. This, from what I understand, is calculated per task category where automation efforts are underway.
The revenue from this tax, they propose, can be recycled to fund targeted worker retraining programs, which increases the economy's income-reabsorption rate and makes the corrective tax potentially self-limiting and transitional over time.
The AI Layoff Trap by Brett Hemenway Falk & Gerry Tsoukalas
